Lease-Purchase Program to Help Southland Buyers

Ten Southland cities have joined in a $70-million initiative to promote affordable homeownership opportunities for low- and moderate-income residents with limited savings.

Organized by the newly formed California Cities Home Ownership Authority, the program aims to encourage families and individuals with little or no savings to participate in a home lease-purchase program.

The cities joining in the initiative are Artesia, Bell Gardens, Compton, Cudahy, Hawaiian Gardens, Huntington Park, Maywood, Pasadena, Rancho Cucamonga and Upland.

Under the lease-purchase program, participants must contribute the first month’s rent plus an initial fee equal to 1% of a home’s purchase price, said Lorinda Johnson, executive director of the homeownership authority.

The home choice is up to the lease-purchaser, Johnson said, but the organization will put 3% down on each home. The lease-purchasers then make monthly payments roughly equivalent to mortgage payments.

After three years of leasing the property, credit-worthy participants can purchase the homes by assuming the mortgages.

“It is truly a ‘win-win,’ not only for the lease-purchaser but for the communities,” Johnson said.

The homeownership authority will also pay closing costs, which will be discounted by the lenders and escrow companies participating in the program.

To be eligible, participants must meet income requirements. A family of up to four members in Los Angeles County can have income of no more than $69,720, Johnson said. In San Bernardino County, the maximum income for a family of one to four is $65,100.

The initial 1% fee must come from the participant’s own funds, but the first month’s rent may be borrowed from family or friends if necessary, Johnson said.

The California Cities Home Ownership Authority will sell $70 million worth of bonds and use the proceeds to buy homes in the participating cities for lease-purchase.

Johnson said the authority will probably buy between 500 and 600 homes. The group will consider issuing a new series of bonds if the program proves successful.

Johnson said her organization has received as many as 300 calls a day since word got out about the lease-purchase program.

“This initiative will reach a wide range of renters that most likely would not otherwise be able to own a home,” Johnson said.

Private companies involved in the effort are Freddie Mac, Sun West Mortgage Inc., First Nationwide Mortgage, Commonwealth Mortgage Assurance Corp. and J.K. Chilton & Associates, an investment banking firm.

For more information, call the California Cities Home Ownership Authority at (909) 949-9833.